VIEW FROM THE GROUND FLOOR: I didn't really have much time for looking at markets in the past week or so as I was out and about doing bookish things, my latest paperback having hit the booksellers' stands.
The book industry is one which doesn't generally outperform the market in good times but, equally, doesn't plunge quite so dramatically in poorer conditions. However, there are so many things people can do these days that we are always afraid the lure of another reality TV programme will prove too much for potential readers.
Last year's general retail market in the UK had a cash turnover of £982 million sterling (€1.4 billion), up just 0.3 per cent on the previous year against an increase in volume of 2.8 per cent. Therefore, trade had to sell much more books for a significantly smaller increase in value. This indicates, in my admittedly biased view, that books are getting cheaper and still represent great value for money.
And, as I said last week, we should eventually see the benefits of a stronger euro and weaker sterling impact on the price - if we don't, I'll be the first to complain.
The one set of market numbers that caught my eye as I whizzed around the bookshops were the US non-farm payrolls for February, which showed a loss of 308,000 jobs, pushing the unemployment rate up to 5.8 per cent. This was a shock because analysts had forecast a loss of a mere 35,000. (Have they all been fired, I wonder, for getting it so dramatically wrong?) The losses came on the back of some gains in January, which has made it all the more difficult for markets to accept.
There's no doubt that corporate America is retrenching more and more and it's difficult to see things improving any time soon. The only sector in which workers actually increased was in government, putting on 13,000 staff against falls in the retail sector of 92,000.
Were our parents right when they talked about safe and pensionable jobs in the civil service? I doubt that Warren Buffet is the kind of parent who espoused the safe and pensionable job route but he certainly espoused the plain rules of investing once more in his annual letter to Berkshire Hathaway shareholders.
This was the one piece of research that I made time for the week as I always enjoy Mr Buffet's musings. He reduces investing to its simplest form - research the company you're interested in, understand what it does, believe in the products, trust the management and stay there for the long haul.
Mr Buffet's methods left him in the cold during the late 1990s as brash young traders wiped the floor with him in terms of returns, but now the brash young traders are re-writing their resumes and Mr Buffet has been able to tell his shareholders that his return on marketable securities outperformed the S&P 500 by 32.1 percentage points last year.
However, he warns this won't keep happening, especially if the market turns bullish. Mind you, he's not expecting that to happen tomorrow or the next day.
His view is that the stocks he holds are good value but certainly not undervalued and unless he sees something that offers pre-tax returns of more than 10 per cent, he isn't going to bite.
It's certainly true that there are times in markets when the best thing to do is absolutely nothing and this could be one of them. Unfortunately, doing absolutely nothing is not an option for stockbrokers or fund managers who need trades and new investors to keep them from adding to the jobless numbers. They have to make you want to do something and are fairly skilled at making you feel inadequate if you suggest that you'll wait and see.
But if the big corporations are holding back in terms of preparing for the months ahead, why should the private investor take a different approach? There are six managers in Berkshire Hathaway over the age of 75 so they've been around the block a number of times. It must be very frustrating for all those who embraced a faster, leaner new paradigm market to see the slow and steady Buffet and his cohorts leading Berkshire into continued success.
And it must also drive Wall Street crazy to listen to him having a go at the dangers of trading esoteric derivative products again. Regular readers will know that I've taken many derivatives with healthy pinches of salt (even though I did actually trade some of the simpler ones!) but I agree with Mr Buffet's view that some of these products are extremely volatile. As he points out, both derivatives and reinsurance are like Hell - "easy to enter and almost impossible to exit".
Derivatives - used extensively by hedge funds to allegedly produce above-average returns no matter what the state of the market - involve high levels of risk and in many cases that risk gets passed around among a relatively few number of traders, which could be a recipe for disaster.
Mr Buffet's investing wisdom hasn't entirely come back into vogue, simply because so many people still want their investments to deliver double-digit returns in days rather than years. And maybe that's a reflection of the sort of society we've become, where we want instant success, instant wealth, instant everything.
But companies don't always get it right on the first attempt and sometimes good products take time. .
